EU Chief Calls 'Federation' the Way Forward for Bloc

By

Laurence Norman and

Gabriele Steinhauser

Updated Sept. 12, 2012 2:44 p.m. ET

BRUSSELS—The European Union's chief executive called for the 27-nation bloc to become a "federation of nation-states" as he launched plans for a regional supervisor to police a financial sector that has been at the heart of the Continent's economic woes.

The ideas for a European federation set out by European Commission President José Manuel Barroso on Wednesday in his annual state of the union address venture into territory on which few senior European bureaucrats have dared to tread. They reflect the start of...